Financial Development, Income Inequality and Poverty in Iran

Document Type : Research Paper

Authors

Alzahra University

Abstract

This study investigates the effect of financial development on income inequality and poverty in Iran by using the Auto regressive Distributed Lags (ARDL) method during 1978-2016. The results indicate that financial development has reduced the income inequality in the long-run. The effect of per capita income on income distribution confirms the Kuznets’ inverted U-hypothesis.  In addition, Gini coefficient increases and income distribution gets more inequitable with an increase in inflation rate. Furthermore, there is a long-run relationship between the ratio of social security expenses to government expenditure and income inequality.  The results also indicate that financial development; increases in per capita income and social security expenses reduce poverty. Moreover, both income inequality and poverty decrease due to financial development. Therefore, financial development through increasing the efficiency of financial institutions and reducing the cost of financial intermediation may reduce both poverty and income inequality.
 

Keywords

References

منابع
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